arbitrarily to exercise the power of Congress over mail and telegraph to interfere with the business carried on under jurisdiction of a State. Congress, in our opinion, has not the right to prohibit the use of the mail or telegraph unless it is clearly shown that the business conducted by their aid is of an absolutely and grossly immoral character. The fact that the instrumentalities of this business might be employed occasionally by some unscrupulous person for illegitimate purposes does not detract from the legality of the business itself, and unless it can be shown that the business is of an inherently immoral character it would be, in our opinion, not within the power of Congress to lay upon it such prohibitions. The case of Champion v. Ames (188 U. S.) has been cited by one of the supporters of the proposed legislation, who endeavored to point out the right of Congress in this matter to be parallel to the case above cited. In this case, in order to get jurisdiction, the Supreme Court of the United States declared that lottery tickets are an article of commerce and that the sending of them from one State to another constitutes interstate commerce. To make that case parallel to the one at issue Congress would have first to prohibit the sending of cotton from one State to another. We do not think that anything like this is contemplated by the proponents of the different bills. POINT VIII. Apart from the question of the possible constitutionality of the proposed legislation, we desire to draw attention to the dangers attending any attempt to restrict or prohibit that which people engaged in a given business regard as an inherent necessity of that business. To strive to force men to give over that which has become to their minds absolutely essential in the conduct of their affairs is simply to encourage them to seek for methods of doing that which they feel they must do, even though those methods come perilously close to evasion of the law. It must be a serious question in the mind of every citizen familiar with the existing business of distributing the cotton crop whether the proposed bills, if enacted into law, would not inevitably give rise to the commission of perjury, evasion, and circumvention of the law. And even more must this be the case when these citizens believe that Congress has itself, by roundabout and unwarranted means, strained its legislative powers to obtain jurisdiction in matters over which, as shown by the tenor of the different bills under consideration, it has no direct concern and over which it has no proper jurisdiction. All of which is respectfully submitted. GEO. W. NEVILLE. EXHIBIT A. [On_title page: New York Supreme Court, Appellate Division— First Department. Richard A. Springs, William D. Martin, and Eli B. Springs, plaintiffs-respondents, v. David W. James, defendantappellant. Opinion. Edward D. Brown, attorney; John R. Abney, counsel for plaintiffs-respondents. Ivins, Mason, Wolff & Hoguet; Smith, Hammond & Smith, Atlanta, Ga., attorneys for defendantappellant. Herbert D. Mason, Victor Lamar Smith, Robert L. Hoguet, and William L. Ransom, counsel.] SUPREME COURT APPELLATE DIVISION. FIRST DEPARTMENT, FEBRUARY, 1910. George L. Ingraham, P. J., Frank C. Laughlin, John Proctor Clarke, Francis M. Scott, Nathan L. Miller, JJ. Richard A. Springs, William D. Martin, and Eli B. Springs, respondents, against David W. James, appellant. No. 4421. Appeal from a judgment entered upon the report of a referee to hear and determine. Herbert D. Mason, of counsel, Robert Louis Hoguet, Victor Lamar Smith, William L. Ransom, with him on the brief (Ivans, Mason, Wolff & Hoguet, attorneys), for appellant. John R. Abney (Edward D. Brown with him on the brief) for respondents. CLARKE, J.: The plaintiffs are members of the New York Cotton Exchange. The defendant resides in Blakely, Ga., and owns 9,000 acres of land in Georgia and 240 in Alabama, upon which he raises cotton, 1,000 to 1,500 bales a year; owns a cotton warehouse which handles from 6,000 to 8,000 bales a year; is engaged in the mercantile business; in the oil fertilizing business; is the president of three banks and a director of two others. He has been engaged for twenty to twenty-five years in the cotton business and, upon his own testimony, has bought and sold cotton upon the New York Cotton Exchange through members thereof for fifteen or twenty years; and for some two years prior to the beginning of this suit had transacted such business through and with the plaintiffs and their immediate predecessors in business. The complaint sets up five causes of action: Three for money laid out and expended for defendant's use and at his request in purchases and sales of cotton for future delivery, upon the New York Cotton Exchange and subject to its rules and regulations, made upon the orders of the defendant, statements having been rendered of such transactions, partial payments made by defendant and promises to pay the balance; the fourth for interest paid on various sums used in said trades; and the fifth upon an account stated for the balance shown upon the final statement rendered of $48,672.13, and a promise to pay. Summarily stated, the defense is that the New York Cotton Exchange is a bucket shop and that the matters set forth were gambling transactions upon which there can be no recovery. Subsidiary thereto defendant claims that the plaintiffs in their dealings with the cotton bought and sold for his account, so conducted themselves as to violate the law of agency, and thereby to relieve him of all responsibility for their acts and of liability to them. An enormous record has been presented to this court, setting forth in minute detail, with hundreds of exhibits, the various and intricate steps in a large number of transactions. The whole record has been carefully examined, but no attempt will be made to state more than the ultimate facts. The New York Cotton Exchange was incorporated by a special act of the New York Legislature, chapter 365 of the Laws of 1871, amended by statutes passed in the years 1880, 1881, and 1883. The purposes of the corporation, declared in the act, were: To provide, regulate, and maintain a suitable building, room or rooms, for a cotton exchange, in the City of New York, to adjust controversies between its members, to establish just and equitable principles in the trade, to maintain uniformity in its rules, regulations, and usages, to adopt standards of classification, to acquire, preserve, and disseminate useful information connected with the cotton interest throughout all markets, to decrease the local risks attendant upon the business, and generally to promote the cotton trade in the City of New York, increase its amount, and augment the facility with which it may be conducted. The corporation was given power to make all proper and useful by-laws not contrary to the constitution and laws of the State of New York or of the United States. There are many by-laws and rules providing for the inspection, classification, storage, sampling, and delivering of cotton and generally regulating the conduct of the members of the exchange and protecting their customers. Section 34 of the by-laws provides as follows: Any member of the exchange who shall be interested in or associated in business with, or who shall act as the representative of, or who shall knowingly execute any order or orders for the account of any organization, firm, corporation, or individual engaged in the business of dealing in differences on the fluctuations in the market price of cotton without a bona fide purchase and sale of the property for an actual delivery (commonly known as a bucket shop), or for anyone acting as agent for such organization, firm, corporation, or individual, shall be deemed guilty of unmercantile conduct, which renders him unworthy to be a member of the exchange; and upon conviction thereof he shall be expelled from membership in the exchange by the board of managers. The method of conducting purchases and sales upon the exchange is by public outcry across and around the "ring." The ring is a space on the floor of the exchange inclosed within a railing, and encircled by an elevated platform 2 or 3 feet wide, led up to by a step or two. The amount and price are recorded by the exchange reporter. Section 93 of the by-laws provides as follows: No contract for the future delivery of cotton shall be recognized, acknowledged, or enforced by the exchange or any committee or officer thereof unless both parties thereto shall be members of the New York Cotton Exchange, and the contract shall be in the following form, viz: Contract. New York New York Cotton Exchange. In consideration of $1 in hand paid, receipt of which is hereby acknowledged, have this day sold to (or bought from) 50,000 pounds in about 100 square bales of cotton, growth of the United States, deliverable from licensed warehouse in the port of New York between the first and last days of next, inclusive. The delivery within such time to be at seller's option in one warehouse, upon notice to buyer, as provided by the by-laws and rules of the New York Cotton Exchange. The cotton to be of any grade from good ordinary to fair, inclusive, and if tinged or stained, not below low middling stained (New York Cotton Exchange inspection and classification) at the price of cents per pound for middling, with additions or deductions for other grades, according to the rates of the New York Cotton Exchange existing on the day previous to the date of the transferable notice of delivery. Either party to have the right to call for a margin, as the variations of the market for like deliveries may warrant, and which margin shall be kept good. This contract is made in view of and in all respects subject to the rules and conditions established by the New York Cotton Exchange, and in full accordance with section 92 of the by-laws. Verbal contracts (which shall always be presumed to have been made in the foregoing form) shall have the same standing, force, and effect as written ones, if notice in writing of such contracts shall have been given by one of the parties thereto to the other party during the day on which such contract was made, or on the next business day thereafter. Section 118 of the by-laws provides that It shall be the duty of the seller, on the day on which transactions in contracts take place, to furnish a contract or slip and deliver his own, already signed, the opposite one in blank, to the buyer; the latter shall then sign his contract, or slip, and return it to the seller * * *. and the form of the slips is prescribed. A sample of such "slip" in evidence reads as follows: New York, Auguest 31, 1906. Bought of Springs & Co., successor to J. H. Parker & Co., and agree to receive from them, subject to the by-laws and rules of the New York Cotton Exchange 2,500 B. cotton Dec. delivery at 9.08 R. H. R. & Co. which interpreted means 2,500 bales of cotton for December delivery at 9.08 cents per pound, and signed by the member of the exchange buying, and the corresponding sold note or slip specified that the signer agrees to deliver. This short form or slip under the by-laws is the equivalent of the long form of contract provided for, with all its terms and conditions. Immediately upon executing an order, the member of the exchange notifies his customer by wire or by mail. A sample of the written notice is as follows: Mr. D. W. JAMES. NEW YORK, August 31, 1906. DEAR SIR: In accordance with your instructions, we have this day made the following transactions for your account, subject to the rules and regulations of the New York Cotton Exchange: Please take notice that all orders for the purchase or sale of cotton, coffee, grain, and provisions for future delivery are received and executed with the distinct understanding that actual delivery is contemplated and the party giving the order so understands and agrees. It is further understood that on all marginal business the right is reserved to close transactions when margins are near exhaustion without notice. SPRINGS & Co., (Successors to J. H. Parker & Co.) All of said notice is in print with the exception of the address, the statement of the amount of cotton sold, and the price. The order for these transactions was transmitted by telegraph in cipher, and the notification of execution was also transmitted by telegraph in cipher. The cipher was from Shepperson's Code of 1881, which has been in common use by dealers in cotton for many years, and was used by the plaintiffs and defendant through the years of their mutual relations. This code contains the following: It is distinctly understood that all orders sent by this table are to be subject in all respects to the rules of the cotton exchange of the market where executed. With every telegram sent by this table, the following sentence will be read as part of the message, namely, this purchase has been made subject to all the by-laws and rules of our cotton exchange in reference to contracts for the future delivery of cotton. All orders sent by this code to buy or sell for future delivery will be with the distinct understanding that the purchases or sales so ordered are to be in every respect subject to the by-laws and rules of the cotton exchange of the market in which they are executed. The learned referee has found as matters of fact that in all the dealings between the plaintiffs and the defendant, the plaintiffs had contemplated actual delivery of the cotton bought and sold for the defendant; in some of the transactions plaintiffs actually received and delivered transferable notices with warehouse receipts for the said cotton; that the plaintiffs did not understand or know that the defendant did not intend to deliver or accept delivery of the cotton sold or bought by the plaintiffs for him, if such were his intentions; that the plaintiffs did not understand or intend that the said orders and requests were orders to pay money according to differences in the cotton market at the time of the purchase and at the time of the sale; that all receipts and deliveries of cotton made by the plaintiffs for the defendant on his contracts were genuine bona fide deliveries and receipts of cotton, and were not understood by the plaintiffs to be fictitious or formal transactions; that the cotton represented by the warehouse receipts received by and delivered by the plaintiffs on the defendant's contracts represented actual cotton of the character and quality capable of being used by actual users of cotton; that the above transactions were not wagers or bets made to depend upon the course of quotations and the prices of cotton on the New York Cotton Exchange and were not intended by the plaintiffs or understood by the plaintiffs to be such bets or wagers; that all the orders and dealings between the plaintiffs and the defendant were understood by both parties to be intended to be made upon the New York Cotton Exchange and in accordance with its rules, regulations, and customs; that the New York Cotton Exchange was a market for the dealings in actual cotton, for delivery and receipt of actual cotton, and was not an association or agency solely for the purpose of wagering and speculating on the fluctuations and prices. of cotton. These findings of fact are sustained by the evidence. That both the parties contemplated that the transactions should take place upon the cotton exchange and were to be controlled by its rules and customs is not susceptible of argument. The defendant, who, upon his own testimony, has been engaged in doing business through members of the cotton exchange upon that exchange for from fifteen to twenty years, and who, the testimony shows, has taken his profits from time to time without objection, for the purpose of avoiding this liability now testifies that his purpose was "to play the market," and that he did not intend either to deliver or receive a pound of the cotton which he ordered the plaintiff's to buy and sell upon the exchange for his account. If we assume that such testimony, given under such circumstances, is credible, that would not be ground for declaring the transactions illegal. Bibb v. Allen (149 U. S., 480) was an action for commissions for services rendered and money paid and advanced by plaintiffs for and at the request of the defendants in selling for their account and as their agents cotton for future delivery according to the rules and regulations of the New York Cotton Exchange. The court reasserted |